This post is NOT a discussion about the medical implications from the COVID-19 crisis. Hopefully wherever in the world you are reading this, you are practicing “social distancing” and taking this crisis seriously.
No doubt you have received hundreds of emails by now saying something like “we are monitoring the impacts of COVID-19”. It goes without saying that we are all monitoring this situation – probably more than is healthy for us emotionally. In this post I am sharing thoughts and ideas I have about how our businesses and the entire travel industry can survive this crisis. Hopefully these thoughts and ideas are useful to you. It may not be the right time, and in that case just file this away for later.
Regardless of what you get from this post I hope that you are healthy and know you are not alone. We are all dealing with this unprecedented crisis. It will be a while before we fully know what we are dealing with. But that doesn’t mean we shouldn’t be thinking about our next steps, which is what I am discussing here.
There are two assumptions that people are making right now. One, that what we learned from the 2008 financial crisis is relevant to this crisis. And two, unlike in 2008, this crisis is not caused by a flaw in our economic system, but an external shock – more akin to September 11th, 2001. When the cause of the shock is dealt with the recovery will begin. Let’s take them one by one.
The economy prior to the 2008 economic collapse was built atop a weak foundation incapable of supporting what was being built upon it. There are similarities to today. While some of the rot that led to the meltdown in 2008 was shored up and fixed, some of it remained or crept back in. Once again, we are being told certain businesses need to be “bailed out”. These are the large corporations that employ 10s of thousands of people and are responsible for basic aspects of our society. In the travel industry these are airlines, cruise lines and large attractions. Tim Wu’s recent opinion piece in the New York Times (Don’t Feel Sorry for the Airlines) highlights that the need for these bailouts is due to negligent business practices by these multinational corporations – just like the banks were responsible for 2008. He says:
“American [Airlines] blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the company’s current market value.”
Sadly, it appears what we learned in 2008 was forgotten (or ignored) by many companies our industry depends upon. And governments did not remain vigilant on regulating corporations to insure they can survive a major shock like this. Rather than address this problem like we did the financial crisis in 2008 by bailing out the multinationals, I suggest we instead rally our sector to advocate for initiatives that help small businesses and the workers least capable to weather this storm. Our focus should be placed on pushing policies that quickly gets cash into the hands of workers being laid off, loan payments being suspended without penalty, and healthcare available for free. For businesses, no or low interest loans need to be quickly approved to keep basic overhead covered and investments flowing so they can be ready to go when this crisis subsides. Which brings us to the second assumption.
First, it should be noted, just like any shock to a system, while the onset may be rapid and seem out from nowhere, those who have been paying attention have been predicting it for years. Sure enough, in 2018 Bill Gates said:
“[T]here is a significant probability that a large and lethal modern-day pandemic will occur in our lifetime… What the world needs is a coordinated global approach to pandemics that will work regardless of whether the next pandemic is a product of humans or of nature. Specifically, we need better tools, an early detection system, and a global response system.”
But suggesting your hotel should have had its fire detection and suppression system upgraded while it is burning down isn’t useful. Still, just as firefighters rushing in to save your hotel can be the difference between a complete loss or a building that can be salvaged, so too is how your response to COVID-19 will be for your business. The uncertainty around when this crisis will end is definitely unnerving and making it difficult to plan. But it is all but assured that it will end at some point. Again, the challenge is we don’t know when this will occur. We still need to plan to be ready for what will happen next.
There are three phases I recommend considering for weathering this crisis and coming out stronger on the other side. The first phase is to reinforce to your community – employees, customers and partners – that they can trust you and that you are there for them. Recently on a webinar offered by the Adventure Travel Trade Association (a great organization to support especially during times of crisis) I received two pieces of advice from Ciclismo Classico founder, Lauren Hefferon. Lauren said she is picking up the phone and calling all of her clients personally to check in with them and make sure they are doing okay. She said that everyone has appreciated that she called them herself. This shows compassion and gratitude for her customers and will go a long way when these people are ready to travel again. Also insightful, in past crises Lauren has taken note of her customers that are first to return – those who are more resilient. These are the clients she knows will be critical to getting trips back out the door when it is safe to travel again. So not only is she reaching out to all of her clients, she is paying special attention to those who will help her get back up and running again.
Another way to show you care about your community is to provide resources to them. Seattle based non-profit Terra-Forma Education knows that, with schools closed, parents and kids are going stir-crazy indoors. With no mention of promoting the 20 spaces left to fill for summer camp, Terra-Forma instead is passing along activities, compliant with social distancing, that parents can do with their kids in the backyard or nearby parks. It is still unknown what is going to happen to summer camps, but if we are lucky to have some resolve by summer, this act of genuine goodwill will help parents trust that Terra-Forma is an organization they can trust.
The second phase is to get creative on how you are going to survive economically in the medium term. This is the “making lemonade out of lemons” part of being a successful business. Hopefully you have access to savings or a loan to get you through the next couple months of complete lockdown. But at some point, you will need to tap into something, even if it isn’t the core service your business offers. Who will be the first ones to travel again? What will you need to do to minimize risks and assuage fears that prospective travelers will have? Assuming people will be more likely to book a last-minute trip not too far from home before they will be ready to get on a plane and fly long distances, are your services something local or regional travelers might be interested to book last minute? What modifications will you need to make to attract this audience? Can you design or communicate an experience that people will feel more comfortable partaking in despite COVID-19 fears?
A local Seattle start-up I am working with realized just this. ROAM Beyond offers lodging in remote and scenic locations using sustainably crafted boutique trailers. Realizing the expected national and international visitor to Washington State is going to be much lower at best, ROAM realized their product will be perfect for locals who cancelled or postponed their summer holidays but still want to get away. The trailers offer a “Refuge in Nature”, much needed after several months of anxiety and being cooped up inside at home. Unlike a hotel where you are interacting with all the other visitors, each couple or family gets their own trailer. A perfect product as we transition out of lockdown but before the perceived risk is back to normal.
The third phase is to communicate your strategy – when the time is right – to your new target market. To be clear, phase one is communicating to your community and customer base that you are there for support and help. This phase is to communicate the ideas you came up with in phase two. How will you get the message out? This can be a challenge since you might be trying to reach a different audience than your usual audience. As with everything in the travel industry, remember you are not alone. Every other local business in your area is facing the same reality as you are. Your local DMO is well aware that it got tough very quickly and the future is uncertain. How can you work together? Can you team up with another business to share the burden? ROAM will be partnering with several local tour companies to comarket their “Stay-cation” ideas, such as Great Guides, First Nature Tours and Olympic Hiking Co. All businesses will benefit if the idea is successful.
Saying it is a tough time for the travel industry is an understatement. It is unclear where we will all end up. First and foremost, in this crisis we must be there for each other. We need to advocate to make sure aid gets to those who need it most. Those of us whose businesses survive will not only be stronger, we will have a sense of solidarity with each other. I will always remember attending the Adventure Travel World Summit in Norway in October 2008. The economy had just collapsed and over half the delegates cancelled last minute. Those who showed up are still some of my closest friends in the industry and who I depend on most for advice and support. We need to have hope that there will be resolution to this crisis at some point. And when that point happens, be ready to continue to provide the life-changing experiences we are known for. This work will be more relevant than ever – when that time comes.
Please be safe and please keep in touch. We are in this together.
